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In the video, the importance of investment terms and conditions is emphasized, highlighting that an investor’s money creates a formal relationship with a company. Investors do not simply hand over cash; they require clear terms that dictate how funds will be used and how they can expect to get their money back when the company succeeds. This underscores the significance of understanding the terms setup, as investments carry inherent risks and expectations. By defining these terms, both the investor and the company can ensure alignment of interests, allowing the investor to monitor how their capital is utilized and anticipate positive returns.